Zumiez, Inc. CEO Rick Brooks is pointing to the retailer’s North America business as the driver for delivering the best third quarter result in several years as comps in the region accelerated to double digit growth, bolstering the company’s confidence heading into the critical holiday season.

“After a successful back-to-school period, sales remained strong throughout the quarter, reflecting the effectiveness of our merchandise assortments and attracting customers who pay full price even during less busy seasons,” explained Brooks. “Encouragingly, our third quarter comp performance was driven by contributions from multiple areas of our business, led by women’s and hardgoods, which were up strong double digits along with low- to mid-single-digit gains from both accessories and men’s.”

Third Quarter Summary
Brooks said the quarter exceeded their expectations as comparable sales grew 7.6 percent on top of a 7.5 percent increase in the year-ago quarter – on top of a 7.5 percent increase in the year-ago Q3 period – representing the retailer’s sixth consecutive quarter of positive comparable sales growth. The consolidated increase in comparable sales was driven by an increase in dollars per transaction and an increase in transactions. Dollars per transaction were up for the quarter, driven by an increase in average unit retail, while units per transaction were roughly flat year-over-year.

Net sales for the third quarter ended November 1 increased 7.5 percent to $239.1 million from $222.5 million in the third quarter ended November 2, 2024. Brooks noted several initiatives that are driving success, including:

  • Within the North America business, premium pricing strategies continue to support both margin expansion and market share growth. While the operational improvements they have executed throughout the year are generating meaningful benefits.
  • Momentum from introducing over 100 new and emerging brands annually has carried forward into 2025 with these new and emerging brands representing an increasingly important component of our sales mix and validating our merchandising strategy.
  • Private label performance remains a standout success story – now representing the highest penetration levels in company history.

Region Performance

  • North America net sales were $202.8 million, an increase of 8.6 percent from 2024. Excluding the impact of foreign currency translation, North America net sales increased 8.7 percent.
    • Comparable sales for North America were up 10 percent, marking the seventh consecutive quarter of comparable sales growth in the region.
  • Other International net sales, which consist of Europe and Australia, were $36.3 million, up 1.7 percent from last year. Excluding the impact of foreign currency translation, Other International net sales increased 3.1 percent year-over-year.
    • Other international comparable sales declined 3.9 percent in the third quarter, but showed sequential improvement from the second quarter.

Category Performance

  • Women’s was said to be the largest positive comping category, followed by hardgoods, men’s and accessories.
  • Footwear was the only negative comping category.

Profitability and Expenses
Brooks added that the high single-digit comps and robust full price sales boosted gross margin, which combined with improved expense efficiency raised operating income significantly year-over-year.

Third quarter gross profit was $89.8 million, up 14.7 percent compared to $78.3 million in the third quarter of last year. Gross profit as a percentage of sales was 37.6 percent for the quarter compared to 35.2 percent in the third quarter of 2024. The 240 basis-point increase in gross margin was said to beprimarily driven by 110 basis points of leverage in store occupancy costs on higher sales and the closure of underperforming stores, 100 basis points of improvement in product margin and 30 basis points of benefit from lower inventory shrinkage.

SG&A expense was $78 million, or 32.7 percent of net sales, in the third quarter compared to $75.9 million or 34.1 percent of net sales a year ago. The 140 basis-point decrease in SG&A expense was reportedly driven by a 110 basis point decrease in non-wage store operating costs and 80 basis points of leverage of store wages tied to higher sales and the closure of underperforming stores.

Company CFO Christopher Work said these benefits were partially offset by a 40 basis-point increase related to annual incentive compensation.

Operating income in the third quarter was $11.8 million, or 4.9 percent of net sales, compared with operating income of $2.4 million, or 1.1 percent of net sales, in Q3 last year.

Net income for the third quarter was $9.2 million, or 55 cents per share, compared to net income of $1.2 million, or 6 per share, for the third quarter of 2024. ZUMZ said it benefited from one-time discrete tax items In the third quarter of fiscal 2025, which increased diluted earnings per share by approximately 9 cents.

“Our effective tax rate for the third quarter of 2025 was 26.1 percent compared with 63.4 percent in the year-ago period,” explained Work. “The year-over-year decrease in the effective tax rate was primarily driven by improved operating results, the allocation of losses across the jurisdictions in which we operate and the previously mentioned onetime tax item.”

Balance Sheet Summary
Work said the business ended the quarter in a strong financial position.

“We had cash and current marketable securities of $104.5 million as of November 1, 2025, compared to $99.3 million as of November 2, 2024. The increase in cash and current marketable securities over the trailing 12 periods was driven primarily by $50.5 million in cash provided by operating activities and the release of $3 million in restricted cash,” he shared. “This was partially offset by share repurchases and capital expenditures of $38.3 million and $12.5 million, respectively. As of November 1, 2025, we have no debt on the balance sheet.”

During the third quarter, ZUMZ repurchased 300.000 shares at an average cost, including commission of $18.61 per share for a total cost of $5.4 million. Fiscal year-to-date through November 1, 2025, the company has repurchased 2.7 million shares at an average cost, including commission of $14.18 per share and a total cost of $38.3 million. As of November 1, 2025, the company had $1.7 million remaining on the $15 million repurchase authorization approved by the Board on June 4, 2025.

The company ended the quarter with $180.7 million in inventory, down 3.5 percent compared with $187.2 million last year. On a constant-currency basis, our inventory levels were down 5.1 percent from last year. “We feel good about our current inventory position,” Work noted.

Fourth Quarter To-Date
Fourth quarter-to-date total sales for the 31 days ending December 2, 2025, increased 7.5 percent, compared with the same 31-day period in the prior year ended December 3, 2024. Total comparable sales for the 31-day period ending December 2, 2025, increased 6.6 percent from the comparable period in the prior year, with changes in foreign exchange positively increasing total sales growth by approximately 1.7 percent. The increase in comparable sales was reportedly driven by an increase in dollars per transaction, partially offset by a decrease in transactions. Dollars per transaction were up for the period, driven by an increase in average unit retail and an increase in units per transaction.

“Importantly, the holiday season is off to a strong start with overall comps up 6.6 percent fourth quarter-to-date and up 8.7 percent over the Black Friday to Cyber Monday timeframe,” Brooks added. “While the overall consumer environment remains choppy, we are encouraged by the pace of our business and are increasingly confident in delivering a solid finish to fiscal 2025 and building on our progress next year.”

For the 31-day period ended December 2:

  • Net sales for the North America business increased 6.7 percent compared to the 31-day period ended December 3, 2024. Excluding the impact of foreign currency translation, North America net sales increased 6.7 percent from the prior year.
    • Comparable sales for North America increased 7.8 percent for the 31-day period in December 2, 2025 compared to the same weeks in the prior year.
  • Net sales for the Other International business increased 10.6 percent. Excluding the impact of foreign currency translation, Other International net sales increased 2.5 percent.
    • Comparable sales for the Other International business increased 2.6 percent year-over-year.
  • Hardgoods was the retailer’s strongest comping category in the 31-day QTD period ended December 2, followed by women’s, accessories and men’s.
  • Footwear was the only negative comping category quarter-to-date.

Fiscal 2025 Fourth Quarter Outlook
Net sales for the three months ending January 31, 2026, are projected to be in the range of $291 million to $296 million, representing sales growth of 4.0 percent to 6.0 percent year-over-year. Consolidated operating margins are expected to be between 8.0 percent and 8.5 percent for the period, resulting in earnings per diluted share of approximately 97 cents to $1.07.

The company opened six new stores in fiscal 2025, including five stores in North America and one store in Australia.

CFO Work reported on the conference call that the company’s recent trend line in North America has been “very encouraging” and provides confidence as they head into the heart of the holiday selling season.

“That said, we think it is prudent to balance our current domestic momentum with some near-term conservatism given the general uncertainty in the macro environment and recent trends where we have seen non-peak consumer traffic soften,” he said. “We are anticipating total sales will be between $291 million and $296 million for the 13 weeks ended January 31, 2026, representing sales growth of 4 percent to 6 percent.”

Total comparable sales are planned to be in the 2.5 percent to 4.0 percent range. This is said to reflect continued strength in North America and comparable sales planned in the 4.5 percent to 6.5 percent range. Comparable sales in the Other International business are planned to be tougher as the retailer anniversaries promotional trends from the fourth quarter of 2024. Internationally, ZUMZ expect comparable sales to be down in the low single digits, with overall growth in product margin dollars year-over-year as the retailer continues efforts to drive full price selling.

For the fourth quarter, Zumiez is expecting product margin to increase modestly from the fourth quarter of last year. Consolidated operating income in the fourth quarter is expected to be between 8.0 percent and 8.5 percent of sales, and they anticipate earnings per share will be between 97 cents and $1.07 compared to EPS of 78 cents in the prior-year Q4 period.

“We estimate that our fourth quarter diluted share count will be approximately 16.5 million shares, which excludes any stock repurchases beyond the end of the third quarter,” Work added.

“Overall, barring a significant downturn in the economy for the full year, we believe that we’ll see year-over-year total sales growth between 4.5 percent and 5.0 percent, and despite the closure of 33 stores in fiscal 2024 and approximately 21 store closures planned primarily in late 2025, which combined, are estimated to have a negative impact on sales of roughly $15 million for the year. Zumiez anticipates 40 to 50 basis points of growth in product margin in 2025 on top of 70 basis points of improvement in fiscal 2024.

“We anticipate driving additional gross margin leverage through other expense categories such as occupancy, distribution and logistics, and finally, we believe that we can hold our 2025 SG&A costs relatively flat as a percentage of sales with our fiscal 2024 results through continued focus on expense management, while also investing in important long-term strategic initiatives,” Work offered. “This is inclusive of the previously mentioned $3.6 million settlement of a wage and hour lawsuit in California as well as meaningful growth in our incentive costs on stronger performance. Combined, these expectations will drive a year-over-year increase in operating margins and net profit for fiscal 2025, with anticipated earnings per share between 57 cents and 67 cents compared to a loss of 9 cents in 2024.”

Included in these fiscal 2025 expectations are the following:

  • Six new store openings during the year, including five in North America and one in Australia.
  • Closing approximately 21 stores in fiscal 2025, including up to 18 in the United States, one in Canada and two in Europe.

“We expect our capital expenditures for 2025 to be between $10 million and $12 million, compared to $15 million in fiscal 2024 and $20.4 million in fiscal 2023,” Work noted, wrapping up his prepared remarks. “We expect that depreciation and amortization, excluding noncash lease expense, will be approximately $22 million, in line with the prior year. And while the effective tax rates have fluctuated significantly by quarter, we anticipate our full year effective tax rate will be roughly 51 percent to 54 percent in fiscal 2025.”

Image courtesy Zumiez, Inc.